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Appendix E

Appendix E. Reporting and Preparing Special Journals. Conceptual Chapter Objectives. C1: Identify fundamental principles of accounting information systems C2: Identify components of accounting information systems C3: Explain the goals and uses of special journals

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Appendix E

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  1. Appendix E Reporting and Preparing Special Journals

  2. Conceptual Chapter Objectives C1: Identifyfundamental principles of accounting information systems C2: Identifycomponents of accounting information systems C3: Explain the goals and uses of special journals C4: Describe the use of controlling accounts and subsidiary ledgers C5: Explain how technology-based information systems impact accounting

  3. Analytical Chapter Objectives A1: Compute segment return on assets and use it to evaluate segment performance

  4. Procedural Chapter Objectives P1: Journalize and post transactions using special journals P2: Prepare and prove the accuracy of subsidiary ledgers P3:Appendix 7-A: Journalize and post transactions using special journals in a periodic inventory system.

  5. Fundamental System Principles C1 Control PrincipleInternal controls for management to monitor the business. Relevance PrincipleProvide relevant, timely and pertinent information. Flexibility PrincipleSystemneeds to meet the changing needs of company. Compatibility PrincipleSystem must be compatible with aims of the company. Cost-Benefit PrincipleBenefits of the system must outweigh the costs incurred.

  6. Source Documents Invoice from supplier Employee earnings records Billings to customers Components of Accounting Systems C2 Increasingly, source documents are electronic files creating a “paperless” system.

  7. Components of Accounting Systems C2 Source Documents Input Keyboards Scanners Modems Bar-Code Reader

  8. Components of Accounting Systems C2 Source Documents Input Hardware Software Professional Judgment Processor

  9. Components of Accounting Systems C2 Source Documents Input CD Hard Drive Tape Paper Document Processor Storage

  10. Components of Accounting Systems C2 Printer Monitor Telephone CD Tape Disk Electronic File Source Documents Input Processor Storage Output

  11. C3 Now, let’s look at how we use special journals in accounting.

  12. PurchasesJournal Cash ReceiptsJournal For recordingcredit purchases CashDisbursementsJournal For recordingcash receipts For recordingcash payments Sales Journal GeneralJournal For recordingcredit sales For transactionsnot in specialjournals Special Journals in Accounting C3

  13. Subsidiary Ledgers C4 Subsidiary ledgers are a listing of individual accounts with common characteristics.

  14. Accounts Receivable Ledger C4 After all items are posted, the balance in the accounts receivable controlling account is equal to the sum of the balances in the accounts receivable subsidiary ledger.

  15. Sales Journal P1 Each transaction yields a debit to Accounts Receivable and a credit to Sales. Also, we need to record the cost of the sale for the transaction. This column total is posted monthly.

  16. Sales Journal P1 On January 1, Jim Carson purchased $600 of merchandise on account from Barry’s Bikes. The cost of the bikes was $400. Record the entry in the Sales Journal. (Assume the use of a perpetual inventory system.)

  17. Sales Journal P1 Daily, each transaction is posted to the appropriate accounts receivable subsidiary account.

  18. Sales Journal P1 A ü in the posting reference column indicates the transaction was posted to the subsidiary account.

  19. Sales Journal P1 Post the total to the General Ledger accounts.

  20. Sales Journal P1 Here is the Sales Journal after recording some additional sales.

  21. Sales Journal P1

  22. Sales Journal P1

  23. Proving the Ledgers P2 The Accounts Receivable controlling account and the subsidiary ledger are in balance.

  24. Sales Taxes P2 On January 4, Jeri’s Jewelry sold a necklace for $450 plus 8% sales tax on credit to Joan Oakes. $450 ´ .08 = $36 The cost of the merchandise was 302.

  25. Sales Tax P2 Each transaction is posted daily to the appropriate Accounts Receivable Ledger account. Column totals are posted monthly.

  26. Sales Returns and Allowances P2 If a company has few sales returns, they may be recorded in the General Journal. A company with many sales returns may use a Sales Returns and Allowances Journal.

  27. Cash Receipts Journal P2 • Categories of Cash Receipts • Cash from cash sales • Cash from credit customers • Cash from other sources

  28. ü ü ü ü ü Amount is not posted individually to an account. ü Amount is posted individually to subsidiary ledger. Acct. No. Amount is posted to specified account. Cash Receipts Journal P2 CASH RECEIPTS JOURNAL Page 1 Sales Accts. Accounts Cash Disc. Rec. Other Date Credited Explanation PR Dr. Dr. Cr. Sales Cr. Accts. Cr. May 7 Sales Cash Sales 300 300 16 Jane Waters Invoice 656 441 9 450 31 Interest Revenue Bank Acct. 409 15 15 31 Total 756 9 450 300 15 (101) (415) (106) (413) ( )

  29. Purchases Journal P2 The Purchases Journal is used to record all purchases on credit.

  30. Purchases Journal P2

  31. Cash Disbursements Journal P2 The Cash Disbursements Journal is used to record all payments of cash.

  32. ( ) Cash Disbursements Journal P2

  33. General Journal Transactions P2 Adjusting Entries Reversing Entries Closing Entries Other transactions not recorded in Special Journals

  34. Hardware Processing units Hard Drives RAM Modems CD-ROM Drives Speakers Monitors Servers Printers Software Programs with a series of commands directing operations of computer hardware such as data input, storage, processing, or output Technology-Based Accounting Systems C5

  35. Integrated accounting programs automatically update related accounts, journals, and ledgers for a single transaction. Computer Technology in Accounting C5

  36. On-line processing enters and processes data immediately. Batch processing accumulates information for a period of time and then processes all the data at one time (daily, weekly, or monthly). Data Processing in Accounting C5

  37. Computer Networks in Accounting C5 Server Work Stations Computer networksare links among computers giving different users access to common databases and programs.

  38. Enterprise Resource Planning Software C5 Enterprise resource planning software, such as SAP or Oracle, links ordering, inventory, production, purchasing, planning, tracking and human resources for many of the world’s largest companies.

  39. Segment Return on Assets A1 A good AIS collects financial data for a company’s various segments. A segment is a part of a company that is separately identified by its products, services, or geographic market.

  40. Segment return on assets Segment operating incomeSegment average assets = Segment Return on Assets A1 This ratio reflects the profitability of the segment.

  41. End of Appendix E

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